Alternatives Outlook 2024 Report

SELF STORAGE

There was considerable capital markets activity across the Australian self storage sector in 2023. Most notably, Abacus de-merged its self storage business into a separate REIT known as Abacus Storage King (ASX:ASK). ASK is now a fully integrated owner-operator of the Storage King Platform with a market capitalisation in excess of AUD 1 billion. Both major Australian REITs completed equity raises in 2023 with relatively strong pricing and limited discounting to book value given the challenging conditions for REITs in 2023. Capital markets activity across the REITs was supported by strong sector fundamentals with growth recorded in RevPAM and stable occupancy in recent reporting periods. Additionally, both REITs reported marginal capitalisation rate de compression earlier in 2023 with rates stabilising later in the year. This was reflective of trends across the broader direct market. There was a reasonable amount of liquidity in the direct market primarily driven by major owners continuing to consolidate their market share. Kennard’s, Australia's largest self storage real estate owner outside of the major REITs, completed several high-profile acquisitions (assets > AUD 10 million). Notably, private investor appetite has been robust outside of private markets driving substantial sales activity in assets < AUD 10 million with small self storage businesses often providing superior returns compared to other entry level real estate.

FIGURE 5: SELF STORAGE EQUIVALENT YIELD

2.50% 3.50% 4.50% 5.50% 6.50% 7.50% 8.50% 9.50%

2014 2015 2016 2017 2018 2019 2020 2021

2022 2023

Source: Cushman and Wakefield, 2024

KEY TRANSACTIONS

Type

Name

Size AUD Yield Buyer/ Investor

Date

Capital Raise Capital Raise

National Storage Expansion

National Storage REIT

325m -

Mar-23

Sector size estimate: AUD 14 billion Prime yield range: 5.50-6.00%

Storage King Spin-off Raise

225m -

Abacus

Jun-23

| AUSTRALIA ALTERNATIVES 13

CUSHMAN & WAKEFIELD